SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report: September 20, 2001 (Date of earliest event reported) PAYCHEX, INC. (Exact name of registrant as specified in its charter) DELAWARE 0-11330 16-1124166 (State of incorporation) (Commission (IRS Employer File Number) Identification Number) 911 PANORAMA TRAIL SOUTH, ROCHESTER, NEW YORK 14625-0397 (Address of principal executive offices) (Zip Code) (716)385-6666 (Registrant's telephone number, including area code) ITEM 9. REGULATION FD DISCLOSURE The registrant's press release dated September 20, 2001 is attached. This release announces the Company's results of operations for the first quarter ended August 31, 2001. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. PAYCHEX, INC. Date: September 20, 2001 /s/ B. Thomas Golisano ----------------------- B. Thomas Golisano Chairman, President and Chief Executive Officer Date: September 20, 2001 /s/ John M. Morphy ----------------------- John M. Morphy Vice President, Chief Financial Officer and Secretary FOR IMMEDIATE RELEASE John M. Morphy, Chief Financial Officer or Jan Shuler 716-383-3406 Access the Webcast of the Paychex, Inc. First Quarter Earnings Release Conference Call scheduled for September 20, 2001 at 11:00 a.m. Eastern Standard Time at http://www.paychex.com at the Investor Relations page. Paychex, Inc. news releases, current financial information, related SEC filings and Investor Relations presentation are accessible at the same Web site. PAYCHEX, INC. REPORTS RECORD FIRST QUARTER RESULTS ROCHESTER, NY, September 20, 2001 -- Paychex, Inc. (NASDAQ: PAYX) today announced record net income of $70.2 million, or $.19 diluted earnings per share, for the quarter ended August 31, 2001, a 20% increase over net income of $58.6 million, or $.16 diluted earnings per share, for the same period last year. Total revenues were $234.8 million, a 15% increase over $203.9 million for the first quarter last year. SERVICE REVENUES For the quarter ended August 31, 2001, service revenues were $216.2 million, an increase of 16% over $186.5 million for the prior year quarter. Payroll service revenue increased 15% to $189.4 million from $164.5 million for the prior year first quarter. The increase in Payroll service revenue reflects growth in the client base, increased utilization of ancillary services and price increases. As of August 31, 2001, 83% of Paychex clients utilized Taxpay (Registered Trademark), the Company's tax filing and payment feature. The Company's Employee Pay Services, which includes Direct Deposit, Readychex (Service Mark) and Access Card products, was utilized by 54% of its clients. Human Resource and Benefits service revenue was $26.7 million, an increase of 22% over $21.9 million for the first quarter last year. This increase is related primarily to increases in clients for 401(k) Recordkeeping, Workers' Compensation Insurance, and Section 125 services and in client employees served by the Company's comprehensive PAS (Paychex Administrative Services) and PEO (Professional Employer Organization) bundled services. 401(k) Recordkeeping revenue increased 26% to $12.3 million for the first quarter from $9.8 million in the same period last year. INTEREST ON FUNDS HELD FOR CLIENTS For the quarter ended August 31, 2001, interest on funds held for clients was $18.6 million, a 7% increase from $17.4 million for the first quarter last year. The increase in interest on funds held for clients is the result of net realized gains on the sale of available-for-sale securities and higher average portfolio balances, offset by the impact of lower interest rates in the first quarter of fiscal 2002. Net realized gains included in interest on funds held for clients were $3.2 million for the first quarter compared with net realized losses of $.1 million in the prior year first quarter. OPERATING INCOME For the quarter ended August 31, 2001, operating income was $93.8 million, a 19% increase over $78.8 million for the first quarter last year. Operating margin for the first quarter of fiscal 2002 was 40% compared with 39% for the first quarter of fiscal 2001. Operating costs for the quarter increased 17% and selling, general and administrative costs increased 10% when compared with the prior year quarter. Combined operating and selling, general and administrative expenses increased 13% in the first quarter over the prior year period. These increases reflect increases in personnel, information technology and facility costs necessary to support the growth of the Company. INVESTMENT INCOME Investment income for the quarter ended August 31, 2001 increased 36% to $7.5 million from $5.5 million in the first quarter of last year. The increase is due to net realized gains on the sale of available-for-sale securities and higher average daily invested balances generated from increases in overall cash flows, offset by the impact of lower interest rates in the first quarter of fiscal 2002. Net realized gains included in investment income were $1.0 million for the first quarter compared with net realized losses of $.1 million in the prior year first quarter. INCOME TAXES The income tax rate for the quarter ended August 31, 2001 was 30.7% compared to 30.5% for the same period last year. B. Thomas Golisano, Chairman, President and Chief Executive Officer of Paychex, said, "We were pleased with our financial results for the first quarter of fiscal 2002 in light of current economic conditions. A slowing United States economy and further interest rate reductions have caused us to adjust our expected total revenue growth for the current year to a range of 13% to 15%. We still expect to generate record revenues and net income in the current year as we continue to focus on increasing our client base and utilization of ancillary services and leveraging our infrastructure." "SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 Certain written and oral statements made by Paychex, Inc., (the "Company") management may constitute "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are identified by such words and phrases as "we expect," "expected to," "estimates," "we look forward to," "would equate to," "projects," "projected to be," "anticipates," "we believe," "could be" and other similar phrases. Because they are forward-looking, they should be evaluated in light of important risk factors. These risk factors include, but are not limited to, general market and economic conditions, including demand for the Company's products and services, availability of internal and external resources, executing expansion plans, competition, and price levels; changes in the laws regulating collection and payment of payroll taxes, professional employer organizations, and employee benefits, including 401(k) plans, workers' compensation, state unemployment, and section 125 plans; delays in the development, timing of the introduction, and marketing of new products and services; changes in technology, including use of the Internet; the possibility of catastrophic events that could impact the Company's operating facilities, computer technology, and communication systems; stock market volatility; and changes in short- and long-term interest rates, changes in market value of available-for-sale securities, and the credit rating of cash, cash equivalents, and securities held in the Company's investment portfolios, all of which could cause actual results to differ materially from anticipated results. The information provided in this document is based upon the facts and circumstances known at this time. The Company assumes no obligation to update this document for new information subsequent to its issuance. PAYCHEX, INC. CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share amounts)
For the three months ended August 31, August 31, 2001 2000 -------------------------------------------------------------------------------- Revenues: Service revenues $216,176 $186,470 Interest on funds held for clients 18,638 17,413 -------------------------------------------------------------------------------- Total revenues 234,814 203,883 Operating costs 53,756 45,927 Selling, general and administrative expenses 87,296 79,130 -------------------------------------------------------------------------------- Operating income 93,762 78,826 Investment income 7,527 5,534 -------------------------------------------------------------------------------- Income before income taxes 101,289 84,360 Income taxes 31,096 25,730 -------------------------------------------------------------------------------- Net income $ 70,193 $ 58,630 ================================================================================ Basic earnings per share $ .19 $ .16 -------------------------------------------------------------------------------- Diluted earnings per share $ .19 $ .16 -------------------------------------------------------------------------------- Weighted-average common shares outstanding 373,978 372,015 -------------------------------------------------------------------------------- Weighted-average shares assuming dilution 377,747 377,165 -------------------------------------------------------------------------------- Cash dividends per common share $ .09 $ .06 -------------------------------------------------------------------------------- (A) Certain amounts for the three-month period ended August 31, 2000 have been reclassified to conform to the current year presentation. In addition, the Company has changed its segment reporting from two segments to one segment in fiscal 2002. (B) Further information on interest on funds held for clients and investment income can be found in the Company's SEC filings under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations" and subheadings "Results of Operations" and "Market Risk Factors." These SEC filings are accessible at the Company's Web site.
PAYCHEX, INC. CONSOLIDATED BALANCE SHEETS (In thousands)
-------------------------------------------------------------------------------- August 31, May 31, 2001 2001 -------------------------------------------------------------------------------- ASSETS Cash and cash equivalents $ 59,325 $ 45,784 Corporate investments 593,649 568,217 Interest receivable 23,276 28,281 Accounts receivable 112,682 100,640 Prepaid expenses and other current assets 8,227 7,306 -------------------------------------------------------------------------------- Current assets before funds held for clients 797,159 750,228 Funds held for clients 1,879,740 2,041,045 -------------------------------------------------------------------------------- Total current assets 2,676,899 2,791,273 Property and equipment - net 96,699 96,078 Intangible assets - net 9,476 9,612 Deferred income taxes 266 1,361 Other assets 8,909 8,872 -------------------------------------------------------------------------------- Total assets $2,792,249 $2,907,196 ================================================================================ LIABILITIES Accounts payable $ 13,136 $ 16,377 Accrued compensation and related items 33,087 57,418 Deferred revenue 3,239 4,421 Accrued income taxes 22,877 9,783 Deferred income taxes 12,993 4,996 Other current liabilities 20,920 19,282 -------------------------------------------------------------------------------- Current liabilities before client fund deposits 106,252 112,277 Client fund deposits 1,864,581 2,031,565 -------------------------------------------------------------------------------- Total current liabilities 1,970,833 2,143,842 Long-term liabilities 5,682 5,512 -------------------------------------------------------------------------------- Total liabilities 1,976,515 2,149,354 STOCKHOLDERS' EQUITY Common stock, $.01 par value, 600,000 authorized shares Issued: 374,300 at August 31, 2001 and 373,647 at May 31, 2001 3,743 3,736 Additional paid-in capital 153,982 139,897 Retained earnings 637,656 601,142 Accumulated other comprehensive income 20,353 13,067 -------------------------------------------------------------------------------- Total stockholders' equity 815,734 757,842 -------------------------------------------------------------------------------- Total liabilities and stockholders' equity $2,792,249 $2,907,196 ================================================================================